How to earn more as a Freelancer

Simply double your hourly rate.

...wrong

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Many developers are quick to say $'x' for a 'y'-page website based on what is the "going rate." There is a better approach.

I used to think that a website costs as much as i am willing to accept and as the client is willing. it needs to be cheaper than everyone else for the client to go ahead with it or so i thought.

There are 3 main pricing options

• Fixed price
• Billing by the hour
• Value based

Billing by the Hour

Your income is capped. Let’s say you’re currently earning $25/hr and you’d like to double your income so you can go on vacation more, invest, etc.

Do you just double your hourly rate?

No.
Clients won’t just accept that you’re now “double” the worth -

why?

Charging by the hour is actually harmful to you & the client.
Most clients ask for an estimate on how long the project will take and they budget accordingly. If you tell them it should take 10 hrs and you bill them for 20, that doesn’t look good and the business won’t be happy.

Charging by the hour discourages efficiency and innovation.
Hourly billing encourages you to not work smart and to drag the hours so you get paid more.(although unethical, just look at it objectively) Some websites can be created in a day or two.

If you are charging by the hour, why would you rush to get this website done as soon as possible when you could delay it by an extra few days & get paid more for it? Or maybe there’s a code snippet/plugin you can buy for $100 that can save you 3 days of coding time, but you are hesitant to do this because that means you lose out on getting paid more and you have bills to pay. Not to mention the administration and arguments with clients to verify you actually worked for the hours they paid you for.

Charging a fixed price

This is pretty simple. You estimate how long the project will take and how much you want to earn. Let’s say it will take you one month. So whatever you want to earn, say $6k, you charge that for the project. Although not the best solution, I do find this better than billing by the hour. But is there a better approach?

Yes!

Value-based pricing

Let’s first start with what is a website?

• An off the shelf commodity.
• An effective marketing channel that can increase sales for a business.

This is crucial to understand. What you are selling is something that can potentially increase sales Chart with upwards trend.

Let’s say you made improvements to an existing website, You charged $2,000, They generated an extra $200,000 in revenue that year from your improvements. In my view, you undercharged for the project. Have you ever wondered what the differences are between a $1,000 website and a $10,000 website? Or a $3,000 website and a $7,000 website?

Answer:
it’s often very similar or close to the same thing.
The only difference is how much they charged for it and WHY.

The goal of value-based pricing is that you’re not selling HOURS.You’re selling potential RESULTS.

Here’s how to do it:
Find out the potential increase in sales value of the project to the client over a year, Then base your price off of this potential return. A rough guideline would be 5-8% of the annual sales increase.

Suppose that a business sells agricultural drone via their website. They ask you to create an improved website focused on generating more sales.

Your 2 main questions should be:

• How many sales do you currently get each month?
• What is your average selling price for a drone ?

suppose they make:

• 10 sales per month
• $1,500 each

Therefore, they make each month ($1,500 x 10 = $15,000).

let’s say you are confident your improvements will generate 2 sales extra per month, this means the business would make an additional $3,000 per month and almost $36,000 after one year, You then prepare your proposal with this mentioned inside.

your price could be $2,000 - $5,000, Would you, ‘as the business owner’ be willing to pay around 5% of what you could potentially make after one year? Of course.You won't close EVERY client like this but you will get the RIGHT clients.

Receiving payment

ALWAYS get 100% payment upfront It reduces conflict or disagreement. The main issue for freelancers is Not getting paid on time, They do the work, the client is either not happy or the project is never “done” so the final payment gets delayed or not paid. Just explain that it’s company policy (this works quite often), If it’s a deal-breaker, then get 50% up-front and decide on the 2nd 50% payment decide on a date for this 2nd payment as a project being “done” is relative to both you and the client.

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Comments

[Anshul Negi]

Good 👍 Article.
I don't do freelancing but code on front-end as well as on back-end and nowadays digging more of MongoDB.
As suggested value-based approach is effective than others, so if a code crashes during that year then how to handle that?
As the client is giving you some % of the profit then how one should charge?

[Luke Harris]

There's a guy on YouTube called Fox Web School who also hammers home this philosophy. I have personally found that it absolutely works and more freelancers should adopt this approach. Thanks for sharing Guy!

[Alexey Vorobyov]

Thanks Luke for suggesting this channel

[Guy Ntare]

This is a revolutionary approach that can help both businesses and developers to grow.
Pleasure is all mine Luke!

[Jad]

Thanks for sharing these valuable information.
Excuse me, I'm new front end developer can you explain to me how a developer can increase a website sales ?!
I'd be grateful for that 😃

[Guy Ntare]

First of all welcome to the club(FRONT END DEVELOPERS)🎉. and thanks for the idea stay tuned, I'm a writing a whole post for you on "How to increase a website sales!".

Pleasure is all mine Gad

[Jad]

Great 🤩
Thank you very much

[Hemraj Raikwar]

I too want to know this

[Giorgos Kontopoulos 👀]

@ntare_guy Points made are well taken but It is never easy to predict how many sales a website will make and even if it is this should not be folllowed blindly as the calculated price can drive potential customers away.

Lets say a local Ferrari dealear comes to you for an improved presentational website of latest ferrari models. The cheapest Ferrari I believe is above $250K. Lets assume the dealer is able to sell 1 extra Ferrari per month after website improvements. You can not blindly charge $250K for improving a presentational website unless you are going to deliver some miraculous improvements. The owner would probably get 2-3 different offers and if you are the one with extrordinarily high price you are probably never going to hear from them again.

My personal approach over the years would be to have a set hourly rate in mind and estimate the time it would take me for the project and weight in some unforseen delays and revisions (+30% to %100 extra hours) and give the customer a fixed price based on the hours but without telling hours or hourly rate. Over the years or over the course of the same year (if you feel comfident) you can raise that hourly rate but it should come with your experience which can be delivered to the client without them realizing.

In some rare cases I would use my calculated price as lower bound and the potential sales improvements as upper bound price limit before arriving to my final offer ;-)

My 2 cents

[Corey Ward]

I couldn't disagree more with the conclusion. Cards on the table: I bill clients hourly, invoice monthly (no deposit), and have been doing so for the majority of the last 10 years. My work needs to continually justify the rate I bill, which is incentive to work hard on every project and always look for ways to get better and more efficient.

The result? I get paid in a timely manner, reliably. Clients come back to me for new projects, and when stakeholders leave, they sell me in on projects at their new companies. I have the flexibility to turn down projects I'm not interested in or steer the tech stack that gets used. And very little of my time is spent on contracts, marketing, or sales. I don't even have a real website, just a kludgy template on Persona.

The reality is that concerns about capped hourly earnings are moot if you're billing at a competitive rate and revising it periodically. Freelancers routinely out-earn their peers doing full-time work while having more flexibility—if they couldn't most wouldn't be taking on the additional risk.

[Sanjoy K. Paul]

Thanks for sharing. I am a full-stack web developer, recently joining here on DEV. I prefer to calculate the hour and then multiple the hourly rate. Most importantly, I analyze and document the requirements with an EDD and let the client approve this. So, we are on the same page and do the design and development by items in an agile method.

Once the Client approves the item/s, then I close that as done.

Thanks,
Sanjoy
skpaul.me
DevsStation.com

[Sarah Price]

Thanks so much for these tips! I usually charge a flat fee up front based on a certain number of hours and revisions. After that I start charging by the hour or request.

[Guy Ntare]

That's not bad(charging a flat fee) but it's not consistent, as i said don't sell HOURS , sell potential RESULTS. Trust me Sarah you'll grow irrevocably.

Thank you Sarah, pleasure is all mine

[Derick Makuto Simiyu]

Thanks for the advice.